FRANCE PARIS REGION OFFICES

Transcription

1 FRANCE PARIS REGION OFFICES QUARTER

2 2 Key data 1.3 MILLION M² Take up (H1 2018) 41 TRANSACTIONS Transactions >5,000 m² (H1 2018) 3 MILLION M² Immediate supply 5.6% Vacancy rate 810 Paris CBD Prime rent Activity and tension The slowdown in French growth seen over Q did not have an immediate impact on the commercial real estate market. The office market remained active over and reached 1.3 million sq m of take-up over H1 2018; this represents a 15% increase compared with the first six months of Increases in take-up may have been seen across all space segments, but the key driver was the major transactions segment (over 5,000 sq m) which accounted for 43% of transactional volume over H with 41 transactions (compared with 29 last year). This strong activity has had a direct impact on falling levels of supply, which are steadily approaching pre-2008 crisis levels. The Paris market is now extremely tense as the vacancy rate has fallen to 2.4% and new space now accounts for just 17% of immediate supply. The increase in construction starts is unlikely to have any significant impact on this situation over the medium term, particularly as many of these projects have been pre-let prior to completion.

3 Jun-08 Nov-08 Apr-09 Sep-09 Feb-10 Jul-10 Dec-10 May-11 Oct-11 Mar-12 Aug-12 Jan-13 Jun-13 Nov-13 Apr-14 Sep-14 Feb-15 Jul-15 Dec-15 May-16 Oct-16 Mar-17 Aug-17 Jan-18 Jun-18 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q (f) Q (f) Q4 201 (f) 3 Economic bright spell clouding over Uncertain economic climate No end to the cycle in sight Following strong growth over 2017 Despite this uncertainty, the international (+2.3%), the French economy slowed economic climate remains buoyant. sharply over Q Business According to forecasters, global growth investment decelerated considerably should reach +3.8% to +3.9% in 2018, following a very active 2017 and bolstered by emerging markets and the household consumption was flat. But United States. Due to ongoing trade these elements alone don t account for tensions with the United States, growth this slowdown. More global factors forecasts have been revised down for (strong appreciation of the euro, France and the Eurozone. Growth in the protectionist tensions from the United States, Italian elections...) are weighing on all the Eurozone economies leading to a slowdown in the business climate since the beginning of the year. Eurozone should therefore stand at +2.1% in 2018 and +1.7% in France. Job creations should remain active, particularly in the service sector, although will not be as sustained as in Research & Forecast Report Colliers International FIGURE 1: CHANGE IN GPD IN FRANCE (%) 0,8 0,6 0,4 0,2 0,0-0,2-0,4 Source: INSEE FIGURE 2: SYNTHETIC INDICES FOR BUSINESS CLIMATE AND CONSUMER CONFIDENCE IN FRANCE Business climate in France Consumer confidence Source: INSEE

4 Continued activity One of the best H1 performances The gloomier economic climate has not affected activity in the Greater Paris Region office market as high levels of take-up were recorded over both Q1 and. 1.3 million sq m of take-up was recorded over H1 2018, representing a 15% increase compared with the same period in This was the best H1 performance since 2007 with a transaction volume far higher than the ten-year average of 1.1 million sq m. Market boosted by major transactions All space segments benefited from this activity with increases in take-up over H The major transactions segment (over 5,000 sq m) was particularly active with 576,000 sq m of transactions over the period, representing a 28% year-on-year increase. 41 transactions of this type have been recorded since the beginning of the year accounting for 43% of take-up un the Greater Paris Region. Shift to the suburbs Paris market still active 550,000 sq m of take-up was recorded in Inner Paris over H1 2018, representing 6% year-on-year growth; this was mainly driven by Paris Centre Ouest which accounted for 56% of the transaction volume for the capital. These results are all-the-more remarkable given the increasing lack of supply. The under 1,000 sq m segment may have been the most active, but so were the medium and large space segment, particularly due to strong activity from co-working operators. Good performance in the suburbs As supply in Paris is becoming increasingly scarce, occupiers are having to look to the Inner Suburbs. The Western Crescent, which has an abundance of supply, has been the main beneficiary of this shift. Within this market, the Southern Loop and Péri Défense performed particularly well due to major transactions, including Nestlé s lease in Issy-les-Moulineaux (45,400 sq m) and Danone s in Rueil- Malmaison (25,100 sq m). Although volumes in La Défense posted a slight decrease (-5% year on year), the market has been sustained due to transactions in the medium space segment.

5 5 FIGURE 3: CHANGE IN TAKE-UP (THOUSANDS SQ M) st quarter 2nd quarter 3rd quarter 4th quarter Research & Forecast Report Colliers International FIGURE 4: DISTRIBUTION OF TAKE-UP BY SPACE SEGMENT (THOUSANDS SQ M) <1,000 m² 1,000-5,000 m² >5,000 m² H H H H H H H H H FIGURE 5: GEOGRAPHICAL DISTRIBUTION OF TAKE-UP (THOUSANDS SQ M) H H H Paris CBD Southern Paris North Eastern Paris La Défense Western Crescent Inner Northern Suburb Inner Eastern Suburb Inner Southern Suburb 2de Suburb Sources: ImmoStat

6 Immediate supply continues to fall 3 million sq m of immediate supply Good levels of activity have led to a continuation of the downward trend in supply which began in By the end of, immediate supply stood at just over the 3 million sq m and fell by 12% year on year. This negative growth affected both new and second-hand space. Levels of new supply continued to fall and now only account for 17% of immediate supply in the Greater Paris Region. Increased lack of supply in Paris The vacancy rate in the Greater Paris Region now stands at 5.6%. Falling levels of immediate supply can be seen in nearly all geographic areas, while vacancy rates reveal some stark contrasts. The lack of supply is becoming increasingly marked and widespread in Paris where the average vacancy rate stood at 2.4% at the end of June. La Défense also saw a substantial decrease in supply (-37% year on year) which resulted in a year-on-year reduction in vacancy rate from 8.5% to 5.4%. Supply >5,000 sq m remains stable Construction starts contributing to supply Confirmed supply of large, high-quality spaces stabilised at 1.5 million sq m. Within this supply, the proportion of space under construction (73%) has steadily increased for over a year, to the detriment of completed space (27%), the volume of which has fallen by 24% over the last 12 months. Projects under construction are frequently pre-let prior to completion. Likely supply (building permit granted or applied for) stands at 2.9 million sq m, almost 2/3 of which are projects which are ready to for construction to begin. Plenty of sources in the West Large-format new spaces that have been completed and are still available are mainly located in the Western Crescent and the Outer Suburbs. 75% of the volume of supply under construction is in Paris, La Défense and the Western Crescent. This market also stands out due to the high volume of projects which have already obtained or applied for building permits. Levels of supply under construction in Paris are starting to fall year on year because of pre-lets. Even so, new projects are emerging and there has been an increase in the volume of space waiting for building permits to be granted.

7 7 FIGURE 6: CHANGE IN IMMEDIATE SUPPLY (THOUSANDS SQ M) Q Research & Forecast Report Colliers International FIGURE 7: CHANGE IN VACANCY RATES (%) 14% Paris Western Crescent 2de Suburb La Défense Rest of Inner Suburbs Average Ile-de-France 12% 10% 8% 6% 4% 2% 0% Q FIGURE 8: IMMEDIATE AND FUTURE SUPPLY >5,000 M² (THOUSANDS SQ M) NEW AND REFURBISHED OR RENOVATED BUILDINGS WITH ENVIRONMENTAL CERTIFICATION Delivered Construction started Building permit obtained Building permit requested Immediate Sources: ImmoStat, ORIE, Colliers International France

8 8 Rising trend for rents Increases becoming widespread The climate of tension between supply and demand for office space has led to a continuation of the trend for rental increases, which began over Q This tension is particularly strong in Paris where values are clearly rising. The prime rent in the Central Business District now stands at 810 per sq m/year. This value could see further increases over the next few months as asking rents are already being seen at higher levels. Average rents in Greater Paris Region for new and second-hand buildings are also rising at +6% and +3% respectively. Incentives still being applied Even though levels are falling in areas with a lack of office supply, incentives are still a consideration in negotiations between landlords and occupiers in the Greater Paris Region. Levels now stand at an average of 20% in the Greater Paris Region with significant differences between Paris and the Suburbs. FIGURE 9: HEADLINE RENTS FIRST HAND PREMISES ( EXCL. TAXES & CHARGES/SQ M/YEAR) Paris Centre West La Défense Rest of Inner Suburbs Rest of Paris Western Crescent 2nd Suburb Source: ImmoStat FIGURE 10: HEADLINE RENTS SECOND HAND PREMISES ( EXCL. TAXES & CHARGES/SQ M/YEAR) Paris Centre West La Défense Rest of Inner Suburbs Rest of Paris Western Crescent 2nd Suburb Source: ImmoStat

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10 FOR MORE INFORMATION TRANSACTION DEPARTMENT Xavier MAHIEU Xavier.Mahieu@colliers.com RESEARCH & FORECASTING Laurence BOUARD Laurence.Bouard@colliers.com This report gives information based primarily on Colliers International data, which may be helpful in anticipating trends in the property sector. However, no warranty is given as to the accuracy of, and no liability for negligence is accepted in relation to, the forecasts, figures or conclusions contained in this report and they must not be relied on for investment or any other purposes. This report does not constitute and must not be treated as investment or valuation advice or an offer to buy or sell property Colliers International France. Colliers International 41, rue Louise Michel Levallois-Perret Colliers International is the licensed trading name of Colliers International Property Advisers UK LLP which is a limited liability partnership registered in England and Wales with registered number OC Our registered office is at 41, rue Louise Michel Levallois-Perret CEDEX